OCBC Global Market Research forecasted the figure to be at 2.5%, while RHB Investment Bank projected it to be at 3.3% and MIDF Research at 3.2%.
In a statement, OCBC senior Asean economist Lavanya Venkateswaran said the 2.5% forecast implies some pick up in price pressures in the coming months.
She said the inflation outlook hinges on the timeline and mechanism of fuel subsidy rationalisation.
“Notwithstanding the rise, inflationary pressures will remain manageable. As such, we continue to expect Bank Negara Malaysia (BNM) to keep its overnight policy rate (OPR) unchanged at 3% in 2024,” she added.
Earlier today, the statistics department announced that the country’s headline inflation remained at 1.5% in January 2024 with the consumer price index at 131.4 points against 129.5 a year earlier.
This was slightly below consensus and OCBC’s estimate of 1.6% as well as RHB Investment Bank’s (RHB IB) estimate of 1.5%.
Core inflation eased further to 1.8% year-on-year (y-o-y) versus 1.9% in December 2023.
Meanwhile, RHB IB maintained its 2024 headline inflation projection at 3.3% y-o-y, taking into consideration the potential upside from the policy manoeuvres amid the fiscal consolidation plan.
“Based on our analysis, fuel subsidy rationalisation and the revision in services tax would have a more significant impact on the inflationary trajectory,” it said in its research note.
It said the magnitude of the upside risks would hinge on a few key factors.
“This includes the effective date of implementation for fuel subsidy rationalisation, the quantum of the prices and tariffs adjustments, and the strength of second-round impacts on household spending and business costs,” it said.
On the external front, RHB IB said it remains cautious about the potential upside bias for commodity and food prices in the upcoming months.
It also opined that the OPR would likely be maintained at 3% for 2024 on the caveat that headline inflation falls in the official range of 2.1% to 3.6%.
Meanwhile, MIDF Research expects a gradual pick-up in overall prices in the first half of 2024 following an increase in utility charges, implementation of a higher sales and service tax rate at 8% (except for food, beverage, and telecommunications), and the 10% for low-value goods tax.
“In the latter half, we opine that it is possible the roll-out of fuel targeted subsidy may see higher retail fuel prices.
“Moving into 2024, we expect overall inflation rate may register at 3.2% on the assumption that the fuel-targeted subsidy would possibly be rolled out as early as June 2024,” said the research house.
It opined the government may introduce a managed-float price mechanism for RON95 and provide cash assistance to those eligible as guided by the Central Database Hub (Padu).
It forecasted that BNM would keep the OPR status quo throughout 2024.